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Economy in Brief

U.S. Payroll Job Gain Is Unexpectedly Strong; Jobless Rate Notches Up
by Tom Moeller  November 8, 2013

The job market posted surprising growth last month. Nonfarm payrolls increased 204,000 (1.7% y/y) during October following upwardly revised gains of 163,000 and 238,000 during the prior two months. A 122,000 gain had been expected according to the Action Economics Forecast Survey. The unemployment rate ticked up to 7.3% and matched expectations. The total unemployment rate, including workers who were marginally attached or part time for economic reasons, rose to 13.8%. 

From the payroll job market survey, the 204,000 increase in employment left the three-month average increase at 202,000, its strongest in six months. Factory sector employment rose 19,000 (0.5% y/y), its strongest since February, while construction jobs added 11,000 (3.3% y/y). Private servicing payrolls improved by 177,000 (2.2% y/y). The gain was led by leisure & hospitality employment which increased 55,000 (3.2% y/y) and retail trade payrolls that rose 44,400 (2.5% y/y). Professional & business services jobs improved by 44,000 (3.6% y/y) with a slim 3,300 rise (8.2% y/y) in temporary employment. Education & health services jobs gained 23,000 (1.6% y/y). Government services jobs fell 8,000 (-0.1% y/y). They reflected a 12,000 drop (-3.3% y/y) in federal government jobs and a 3,000 shortfall (+0.5% y/y) in local government hiring. State government jobs increased 7,000 but were unchanged y/y.

The length of the average workweek was unchanged at 34.4 hours. Factory sector workers were on the job for an average 40.9 hours, up from 40.5 hours twelve months ago. Construction workers put in 38.9 hours versus 38.7 last October and private service employees worked 33.3 hours versus 33.2 hours last year.

Average hourly earnings ticked up 0.1% (2.2% y/y). Earnings in the goods-producing sector increased 2.5% y/y while private service workers earned an additional 2.1% y/y. Within services, information industry workers earned 4.5% more than they did last year but professional & business services workers got modest 1.6% pay increases. Construction workers earned 1.5% more versus last year.

From the household sector survey, the unemployment rate ticked up m/m to 7.3% but remained down from 7.9% one year ago. Employment fell 735,000 (+0.2% y/y), reflecting the federal government shutdown. That came with a 720,000 worker decline (-0.5% y/y) in the labor force. It lowered the labor force participation rate to 62.8%, its lowest since 1978. The average duration of unemployment fell to 36.1 hours but 26.7% of workers were jobless for 52 weeks or more.

By educational attainment, the unemployment rate for individuals with less than a high school diploma was 10.9%. For high school graduates with no college it was 7.3%. For those with some college employment, the rate was 6.3% and for college grads it was 3.8%.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases. The expectation figures are from Action Economics and are in the AS1REPNA database.

Employment: (M/M Chg., 000s) Oct Sep Aug Y/Y 2012 2011 2010
Payroll Employment 204 163 238 1.7% 1.7% 1.2% -0.7%
 Previous -- 148 193 -- 1.4 1.2 -0.7
 Manufacturing 19 4 15 0.5 1.7 1.7 -2.7
 Construction 11 18 1 3.3 2.0 0.3 -8.3
 Private Service Producing 177 123 187 2.2 2.2 1.9 -0.1
 Government -8 13 31 -0.1 -0.8 -1.8 -0.3
Average Weekly Hours - Private Sector 34.4 34.4 34.5 34.3
(Oct'12)
34.4 34.4 34.1
Average Private Sector Hourly Earnings (%) 0.1 0.1 0.3 2.2 1.9 2.0 1.8
Unemployment Rate (%) 7.3 7.2 7.3 7.9
(Oct'12)
8.1 8.9 9.6
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